By Sara Bristoll

In the past we’ve discussed how money is the number one cause of arguments between couples, and how it is important to make sure the two of you are on the same page about your goals and financial well-being. It’s good advice for more than just couples living in Arizona!

It turns out, your relationship health may not only benefit from clear communication about money matters and joint financial goal setting. You could be putting your relationship at risk by having a low credit score.

In a report released by the Federal Reserve Board in early October 2015, Jane Dokko, Geng Li and Jessica Hayes explored the effect a credit score has on your love life. The results were rather surprising.

Here’s what they found:

Your credit score and your trustworthiness go hand-in-hand.
How can your credit score be used to determine your trustworthiness? It’s simple really; your score has been used by lenders for years to determine the likelihood that you will repay debt that you owe. In other words, are you trustworthy enough for them to lend you money?

A credit score, by definition, is a reflection of your past money management decisions. Do you pay your bills on time? Do you take out large amounts of debt and run up your credit card balances? Are you frequently opening (or attempting to open) new lines of credit? All of these factors are included in your credit score. Therefore, a low credit score could be a sign of poor financial decision making. The authors of the study follow this train of thought to the conclusion that if you’re not able to pay back debt as you promised, what other promises will you break? And if you’re consistently breaking promises, are you someone that a spouse would truly trust?

Couples with a lower average score are two to three times more likely to separate than couples with a higher average score at the start of a relationship.
Dokko, Li and Hayes note that “initial match quality in credit scores has important implications for couples’ use of joint credit accounts, acquisition of new debt, and the risk of financial distress.”

Here’s how your (and your spouse’s) credit score can affect joint credit accounts:

Lenders often use the lowest credit score on a joint loan application to determine the loan interest rate. When one or both partners in a relationship have a low credit score, the cost of the loan – and loan payment amount – increases significantly. When the cost of the loan goes up, your payment goes up – using up available monetary resources you and your spouse could be using for other necessities, nights out, savings, etc.

If the couple decides to use only the person with the higher credit score on the loan, they lose the ability to use the lower-credit-score partner’s income as well. This often places a limit on the amount they can borrow.

Looking for love? Improving your credit score can help.
The Federal Reserve study finds that a 109 point improvement in a person’s credit score gives them a 14 percent greater chance of forming a relationship in the next year. Additionally, those with the lowest credit scores in the study were 30 percent less likely to form a relationship in a given year.

If your credit score is really a sign of your overall trustworthiness, it could follow that someone would be more likely to form a relationship with someone they trust, who ultimately has a higher credit score.

Does this mean you should brush someone off just because his or her credit score is bad? Not necessarily. As you’ve seen in the “My Comeback with Kurt Warner” series, there can be many reasons someone doesn’t have a great credit score: not knowing any better, bad habits or a tragedy that throws the person off course.

If your partner’s low credit score is something that concerns both of you and your significant other is willing and ready to do what needs to be done to raise his score, it’s a step in the right direction. On the other hand, if your partner is unconcerned with his spending habits and how his credit is affecting your futures, it’s best to proceed with caution. p

Looking to raise your credit score? Our experts can help! Come in to any Phoenix Arizona Federal credit union location for a free credit consultation to review your credit and set a course of action to improve your score. Call (602) 683-1000 to make an appointment.